The Federal Reserve has held its benchmark rate at a range of 5.25% to 5.5% — the highest in more than two decades.
That number trickles down to your mailbox in the form of credit card statements charging an average APR above 22%, according to Fed data, the steepest on record.
If you're carrying a balance, you're paying for it every single month.
Grocery prices are up roughly 25% since early 2020, rent has climbed faster than wages in most metros, and auto loan rates have pushed past 8% for new cars.
Paychecks grew, but not enough to outrun the compounding cost of everything households buy on credit.
That gap is why searches for debt consolidation loans keep climbing.
Here's the pitch you'll see everywhere: roll high-interest card balances into one lower-rate personal loan, make a single fixed payment, and save hundreds monthly.
Personal loans from online lenders currently range from about 7% to 36% APR depending on credit score, and a borrower with good credit swapping a 24% card rate for an 11% loan could cut interest costs substantially.
Consolidation moves debt, it doesn't erase it.
Lenders don't report that you paid off the cards in a way that removes them from your credit history — and the freed-up credit lines stay open.
Studies and lender data repeatedly show a chunk of borrowers run those cards back up within a year or two, ending up with the original balances plus the loan.
That's the trap, and it's an expensive one.
Many personal loans carry origination fees of 1% to 8%, deducted before you see the money.
Some advertised "debt relief" or "debt settlement" companies are a different animal entirely, charging monthly fees while telling you to stop paying creditors — a move that tanks your credit score and can trigger collections or lawsuits.
The Consumer Financial Protection Bureau has sued multiple operations over these tactics.
Start by checking whether a nonprofit credit counseling agency — member of the National Foundation for Credit Counseling — can negotiate lower rates through a debt management plan, often at little or no cost.
Call your card issuers directly and ask for a hardship rate; it works more often than people expect.
If a consolidation loan still makes sense, set up autopay, then freeze or close the paid-off cards if you don't trust yourself with them.
Run the total cost before signing anything: a $10,000 loan at 12% over four years costs roughly $2,600 in interest.
Compare that against what you'd pay leaving the balances where they are.
Sometimes it just stretches the pain over more years.
The bottom line is that no loan fixes the spending gap that created the debt in the first place.
Consolidation is a tool, not a rescue — and the borrowers who come out ahead are the ones who change the behavior alongside the interest rate.
Final Thoughts
If the payments still don't fit your budget after the math, that's a signal to talk to a counselor before a lender.